Friday, March 11, 2011

Official Statement (NEW YORK Fri Mar 11, 2011) - U.S. consumer sentiment fell to its lowest level in five months in early March as gasoline prices rose, a survey released on Friday showed. The preliminary March reading of the University of Michigan's consumer sentiment index for March came in at 68.2, down from 77.5 in February. That was the lowest level since October 2010 and was well off the median forecast of 76.5 among economists polled by Reuters.

Trend Current sentiment (preliminary) is now below the descending 3-month moving average (73.3) after 4 consecutive months above. The index is below the descending 12-month moving average (71.7) after 3 consecutive months above. The index is below the ascending 24-month moving average of 70.9 after 5 consecutive months above. The index continues above the level 36-month moving average for the 5th consecutive month. (The 3-month, 24-month, and 36-month moving averages charts are not shown on this post).

Cycle History Consumer Sentiment in March (preliminary) is down -28.7 and -30% from the intermediate-term peak of 96.9 in January 2007. In 2004 the index was greater than 100. The current sentiment is up +12.9 and +23% from the Great Recession cyclical bottom of 55.3 in November 2008 (the all-time low). Therefore, the current sentiment is closer to the cyclical trough than peak.

Consumer Sentiment (Chart) Below is a chart of the latest 29 months of the Reuters/University of Michigan Index of Consumer Sentiment from November 2008 through the latest month reported, March 2011 (preliminary). November 2008 was the Great Recession and all-time low 55.3. The Post-Great Recession high in June 2010 at 76.0. (This preliminary data will be updated to the revised data on the chart later this month, without a subsequent post.)

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Consumer Sentiment 12 Month Moving Average (Chart) Below is a chart of the latest 63 months of the Reuters/University of Michigan Index of Consumer Sentiment 12 Month Moving Average from December 2005 through the latest month reported, March 2011 (preliminary). The previous chart above, the Index of Consumer Sentiment, is rather like following the bouncing ball when charting human sentiment, confidence, mood, and outlook regarding the USA economy. Therefore, the 12 month moving average chart smooths out these short-term ups and downs. The Pre-Great Recession peak was in August 2007 at 89.5 while the Great Recession low was in March 2009 at 60.1. The Post-Great Recession peak has been in February 2011 at 72.2. The 12 month moving average has mostly leveled off, after all the increases and decreases in the past 12+ months.

Commentary The Reuters/University of Michigan Index of Consumer Sentiment at 68.2 (preliminary) in March was an expected drop due to higher gas prices and the question was how much it would drop. The Conference Board monthly Consumer Confidence Survey for March, to be reported later this month, will also be expected to drop. Gallup is also reporting lower economic confidence on March 8, "U.S. Economic Optimism Declines in February". The Conference Board will report their monthly Consumer Confidence Survey at the end of this month and Reuters/University of Michigan will revise the preliminary Index of Consumer Sentiment later in the month.

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